|WikiProject Economics||(Rated Start-class, Low-importance)|
- Peter Schiff's Euro Pacific Bank claims to practice full reserve banking (http://europacbank.com/company/security/) "Euro Pacific Bank is a pioneer in transactional only banking. The bank maintains a 100% deposit ratio, makes no loans and does not engage in leverage or speculation with client assets. "
- James Turk's GoldMoney claims to practice full reserve gold banking
- — Preceding unsigned comment added by 184.108.40.206 (talk • contribs) 16:12, 12 September 2013 (UTC)
- Bitreserve claims to practice full reserve banking and publish a real time audit of reserves and liabilities (https://bitreserve.org/en/status) — Preceding unsigned comment added by 220.127.116.11 (talk) 13:28, 2 March 2015 (UTC)
|The following discussion has been closed. Please do not modify it.|
Swiss Sovereign Money Initiative
A Swiss referendum on banning fractional reserve banking and the creation of money by commercial banks is to be held in 2016 after over 100.000 Swiss signed a petition to hold such a plebiscite in accordance with Switzerland's citizen-driven legislation process.
The proposal, if accepted by voters in a referendum, would limit the ability of commercial banks to issue money and reserve this power to the Swiss Central Bank (SNB).. This would create a system of Full-reserve banking in Switzerland.
Bizarre OR claim
The claim that Euro Pacific or any individual bank operates "full reserve banking" needs to be verified by a secondary Reliable Source. I doubt that any such source exists. What would this mean? That Euro Pac holds customer deposits of fiat dollars safe in its deposit account at its conventional clearing bank? What backs those deposits? Does Euro Pacific bank hold paper banknotes in its vault? Does it process withdrawals by a Fedex shipment of banknotes to the customer? SPECIFICO talk 15:41, 4 March 2015 (UTC)
--All banks have a reserve ratio, core capital ratio, Tier 1 capital, etc... which are easily seen in their balance sheet and are normally confirmed by external auditors and regulators. Standards like Basel III impose minimum core capital ratios. Full reserve banking means having a reserve ratio of 100%. (Most European banks currently have reserve ratios of 3-5%)18.104.22.168 (talk) 11:00, 5 March 2015 (UTC)
- Full-reserve banking is not currently legally enforced anywhere in the world, although a number of banks and financial institutions claim to practice it, including Euro Pacific Bank, GoldMoney , Bitreserve.
Dr. Musgrave's comment on this article
Dr. Musgrave has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:
Paragraph from article:
Monetary reforms that included full-reserve banking have been proposed in the past, notably in 1935 by a group of economists, including Irving Fisher, as a response to the Great Depression. Currently, no country in the world requires full-reserve banking: banks operating under a full-reserve ratio generally do so by choice or by contract.
Comment by Ralph Musgrave:
Re the claim that “..no country in the world requires full-reserve banking..”, an exception to that is arguably that money market mutual funds in the US (MMMFs) are banks of a sort, and essentially they now have to obey the rules of full reserve. I .e. where an MMMF wants to promise depositors $X back for every $X deposited, that money can only be lodged at the Fed or put into an ultra safe investment, like short term US government debt. Reference / source:
“SEC Adopts Money Market Fund Reform Rules” (2014) Securities and Exchange Commission. https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542347679 __________
Paragraph from Wikipedia article:
Economist Milton Friedman at one time advocated a 100% reserve requirement for checking accounts, and economist Laurence Kotlikoff has also called for an end to fractional-reserve banking. Austrian School economist Murray Rothbard has written that reserves of less than 100% constitute fraud on the part of banks and should be illegal, and that full-reserve banking would eliminate the risk of bank runs.
Comment by Ralph Musgrave.
Friedman set out his ideas on full reserve here: Friedman, Milton (1960). “A Program for Monetary Stability”. Fordham University Press. New York. ( See in particular Ch3 under the heading “How 100% reserves would work”.) ________
Paragraph from Wikepedia article:
Some economists have noted that because banks would not earn revenue from lending against demand deposits, depositors would have to pay fees for the services associated with checking accounts. This, it is felt, would probably be rejected by the public although with central bank zero and negative interest rate policies, some writers have noted depositors are already experiencing paying to put their savings even in fractional reserve banks. Economists Diamond and Dybvig have warned that under full-reserve banking, since banks would not be permitted to lend out funds deposited in demand accounts, this function could be expected to be taken over by unregulated institutions. Unregulated institutions (such as high-yield debt issuers) would take over the economically necessary role of financial intermediation and maturity transformation, therefore destabilizing the financial system and leading to more frequent financial crises.
Comment by Ralph Musgrave.
The answer to that “unregulated institutions” point that would probably be given by Adair Turner (former head of the UK’s Financial Services Authority) is that the regulations governing industry X should apply to all organizations that are in the X business regardless of whether they openly admit to being in the X industry or not. In short, there is no obvious reason why shadow banks should be excused obeying bank regulations just because they call themselves “shadow banks”. As Adair Turner put it, “If it looks like a bank and quacks like a bank, it has got to be subject to bank-like safeguards.” Source:
Turner, Adair (2012). “FSB seeks to tame shadow banking” Financial Times. London. http://www.ft.com/cms/s/0/23eefd10-3175-11e2-b68b-00144feabdc0.html#axzz4BMZUd94s __________
Paragraph from Wikipedia article:
In the wake of the 2008 financial crisis, Martin Wolf, chief economist at the Financial times, endorsed full reserve banking, saying "it would bring huge advantages". John H. Cochrane also has come out in favor of full reserve banking. In a response in the New York Times, Paul Krugman stated that the idea was "certainly worth talking about", but worries that it would drive financial activity outside the banking system, into the less regulated shadow banking system.
Comment by Ralph Musgrave.
There are many works on full reserve banking, or at least which are largely concerned with the arguments for and against full reserve. This is a list (certainly not a complete one) of works which argue for full reserve, against it, and which are relatively non committal.
Tobin, James (1987). “The Case for Preserving Regulatory Distinctions”. in Restructuring the Financial System, Federal Reserve Bank of Kansas City, 1987, pp. 167-183. https://www.kansascityfed.org/publicat/sympos/1987/s87tobin.pdf
Phillips, Ronnie (1992) “Credit Markets and Narrow Banking”, working paper No. 77, Jerome Levy Economics Institute of Bard College. http://www.levyinstitute.org/pubs/wp77.pdf
Huber, Joseph & Robertson, James (2000). “Creating New Money” New Economics Foundation. London. http://www.jamesrobertson.com/book/creatingnewmoney.pdf
Werner, Richard, Ben Dyson, Tony Greenham & Josh Ryan-Collins (2011) “Towards a twenty-first century banking and monetary system” http://b.3cdn.net/nefoundation/3a4f0c195967cb202b_p2m6beqpy.pdf
Sawyer, Malcolm (2016). “Full Reserve Banking: More ‘Cranks’ Than ‘Brave Heretics’” Cambridge Journal of Economics. http://cje.oxfordjournals.org/content/early/2016/06/02/cje.bew016.short?rss=1
Klein, Matthew (2013). “The best way to save banking is to kill it”. Bloomberg. https://www.bloomberg.com/view/articles/2013-03-27/the-best-way-to-save-banking-is-to-kill-it
Ryan-Collins, Tony Greenham, Richard Werner & Andrew Jackson (2011). “Where Does Money Come From?”. London. New Economics Foundation.
Jackson, Andrew & Ben Dyson (2012). “Modernising Money”. London. Positive Money.
Pro full reserve organizations.
At the time of writing (2016) there are organizations in many countries which campaign for full reserve banking, or something similar. For example:
Positive Money in the UK. http://positivemoney.org/
Monetative in Germany. http://www.monetative.de/
Vollgeld in Switzerland. http://www.vollgeld-initiative.ch/english/
We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.
Dr. Musgrave has published scholarly research which seems to be relevant to this Wikipedia article:
- Reference : Musgrave, Ralph S., 2014. "The Solution is Full Reserve / 100% Reserve Banking," MPRA Paper 57955, University Library of Munich, Germany.
Ralph Musgrave is unaffiliated with any tertiary or other institution, and has no published peer-reviewed papers. See his self registered repec page. He writes a blog pushing full reserve banking . His "MPRA Paper" is essentially self-published by uploading to an open access website. The site essentially accepts any paper as long as it is of an 'academic' nature, and fully downloadable. To put it bluntly, Musgrave is a fringe activist using Expertbot to give a veneer of credibility to his non-mainstream views. This is a case of ExpertIdeasBot abuse. LK (talk) 02:55, 16 June 2016 (UTC)